ONGC says may break even after gas price hike

ONGC's average fee of manufacturing of herbal fuel at some stage in 2016-17 become USD three.10 consistent with mmBtu and at the government mandated fees it become incurring great below-recoveries from its fuel enterprise, he stated. Loss of sales on fuel business considerably impaired the business enterprise's capability to fund its capex plans and hampers maximum ongoing and future improvement tasks. ONGC has lengthy complained that fuel rate is unremunerative and it incurs loss at the business. As according to a new mechanism authorised by way of the authorities in October 2014, the price of domestically produced natural gas is to be revised every six months -- April 1 and October 1 -- the usage of weighted average of rates widely wide-spread in gasoline surplus markets like Henry Hub (US), National Balancing Point (UK excluding Russia), Alberta (Canada) and Russia. Using this formula, the charge for October 2018 to March 2019 came to USD 3.36 per mmBtu compared to USD three.06 in the previous six months. ONGC officials stated the USD three.59 per mmBtu average fee is without thinking of return on capital and after considering a respectable go back the fee must be no longer much less than USD 4. India's biggest natural gas manufacturer is demanding a ground or minimum fee of natural gasoline be fixed at USD 4.2 in keeping with mmBtu for the commercial enterprise to make financial sense. The professional stated ONGC's tremendous discoveries in KG basin and Gulf of Kutch could want a higher charge to deliver them to production. Gas discoveries in the shallow sea off Andhra Pradesh on the east, and rancid Gujarat at the west are economically unviable to produce on the contemporary government-mandated charge of USD 3. 36, he said, including that inside the absence of a feasible gasoline price, it will must mothball the USD 1.Five-billion initiatives. The authentic stated the Krishna Godavari basin block KG- OWN-2004/1 is in shallow water and does now not qualify as a difficult discipline, which get higher gasoline charge of USD 7.Sixty seven in line with mmBtu from October 1. On the western side, the block GK-28 in Gulf of Kutch is a nomination block which does not qualify for better quotes, he stated. While the KG block will produce a peak output of five.35 million wellknown cubic metres in keeping with day, the same from Gulf of Kutch block can be round 3 mmscmd. It would take at least three years to deliver the gasoline reveals to manufacturing. The blended output is set 14 in keeping with cent of the ONGCs cutting-edge output of 60 mmscmd. He said the KG block discoveries are in water depth of virtually eight-metres, developing which is high-priced considering the fact that ultra- shallow rigs are scarce and consequently costly. ONGC also has more than one smaller fields with a total predicted height manufacturing of 1.1 mmscmd, which can't viably produce on the contemporary domestic gas charges. Natural gas constitutes round forty five per cent of ONCG's general crude oil and herbal gasoline manufacturing quantity. It produces round seventy five in line with cent of the country's herbal gas output. Dailyhunt https://www.vox.com/users/zeeraveeraz

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